RBI

“Is it not clear? By asking for explanations, you are wasting the precious time of senior government officials that can be put to use for issuing more confusing and unnecessary rules.”

A senior government functionary made his displeasure evident when cornered by a section of the media on the burning issue of demonitisation of currency notes of the two largest denominations, 500 and 1000, that contribute 86% to the currency in circulation in India, for dealing a body blow to “black money” in national interest, that subsequently changed to “move towards digital transactions” in national interest, that have anyway been growing rapidly on their own, and the latest decision of the government in this regard, of asking people, who seek to deposit the old notes even within the originally declared deadline, to provide a satisfactory explanation of why they did not deposit earlier.

“Let me explain for one last time. On 8th November, and several times thereafter, we have said that people should not be in a hurry and can deposit their stock of old, demonetised currency notes in their bank account till 30th December. Hence, anyone who tries to deposit these notes on the 20th of December or anytime after, till 30th December, is obviously flouting that rule and now needs to explain why he has delayed depositing this money. These people have brought it upon themselves.

The rule-book says stop at a red light, people don’t follow.

The rule-book says form a queue at the ticket counter, people don’t follow.

The rule-book says don’t throw trash in the open, people don’t follow.

Are you telling me that our countrymen have suddenly chosen to become rule-book followers? This is obviously an attempt of the Opposition parties to get people to follow the rule-book and embarrass the government. These people will be punished for their faith in the government’s assurances. Their actions are against national interest. If all the old notes come back to banks, how will the government make any money on this initiative and spend it on unnecessary projects?

Our hand has been forced. This is why it has been decided that people who seek to deposit the old notes need to provide a satisfactory explanation of why they did not deposit them earlier despite the government’s assurance that the deposits could be made till the 30th of December. What’s more, this explanation needs to be recorded in the presence of two bank officials, because bank employees have no guidance or authority on which explanation to accept as suitable and which to not.

As elected representatives of the people, if we don’t call upon commercial entities like banks to sacrifice their business interests, who will?

As you might know, apart from accepting deposits, issuing advances, managing operations and risk, opening and closing accounts, selling financial instruments like mutual funds and insurance, transferring money, handling trade transactions, dispensing and accepting cash, our bankers have really very little to do. We successfully employed them in fruitless activities like repeated exchanges of discontinued currency notes from 8th November. As the exchange scheme was withdrawn randomly one fine day, we have now involved bankers to witness recording of statements from mostly honest account holders as to why they did not deposit money earlier, despite the deadline still being ten days away. Think of the millions of youngsters graduating from college every year, many of them aspiring to work for banks, especially the engineering graduates. We have to protect their future as well. If the situation starts improving anytime soon, we may increase the number of bank officials required to witness depositor explanations to three, or even four.

And this decision has not been taken in isolation. We have gradually built up to this by issuing false promises and assurances from time to time, like this is a short-term pain, like it will take only three weeks for the situation to improve, like there is enough stock of new currency, like the government is closely monitoring the situation, and many more. Even today, the common man seems to be expecting that he will soon be able to withdraw and deposit his own money from and into his bank account.

Meanwhile, as you may have heard, the Finance Minister has clarified that RBI has enough stock of new currency to fulfil the need of all banks and account holders. They are just not releasing them to banks. Just like that.

This is necessary for patriotism. If we had not brought the banking system, and all business, to a grinding halt, would you feel that you are undergoing this pain in the national interest? Tell me honestly, would you ever?

Some of you might even want to know the logic behind the introduction of the Rs. 2000- note. Do you?

Well, just like that.

Yes, just like that.

Because there is no logic.

Tell me, what better way to thwart potential black-money hoarders, the objective initially put out, than by creating utter confusion?

Since we ourselves have no idea why we have introduced a Rs. 2000 note, how do you expect anyone to, be it the common man, the politician or the black-money hoarder?

And since they have no idea, how do you expect them to indulge in their corrupt practices?

The common man, on the other hand, has tasted blood. He wants to contribute to the national interest. He wants more. More de-monetisation. More pain. More suffering. He is willing to live in perpetual penury so that black money can be eliminated for his good. May his tribe increase.

Where do we go from here?

First, we prevented people from using their own money that they had in cash. Then, we successfully prevented people from using their own money lying in bank accounts by creating unending queues for withdrawal. Now, we have prevented people from depositing the cash they held. I think the virtuous circle is complete.

But, for an elected representative of the people, the work is never complete. Since people have elected us and reposed their faith in us, it is left to us to decide what constitutes national interest and patriotism. The battle is far from over. People are clever. They have deposited all the money we had called “black”, back in bank accounts. In such a situation what can a well-meaning government do? Launch a witch-hunt of course against citizens.

Further, in order to promote the patriotic spirit and national interest further, we plan to soon bring out rules that prevent people from living in their own houses, wearing their own jewellery and driving their own cars and bikes.

We are geared for the challenge. By the time you go to press with this interview tomorrow, we would have already rolled back, though only partially, the rule introduced with great fanfare yesterday, requiring people depositing old notes to explain reasons for the delay. We will also ensure that only a small section of the impacted banks are advised of the change. We will then partially roll back the roll back announced.

I don’t want to reveal the hand, but you should soon start seeing a removal of the curbs on withdrawal of cash from accounts. However, since banks will not be given any cash, they will not be able to pay any to customers. It will be the problem created by the inefficiency of banks, despite the best intentions of the government.

As you may have overheard the common man say confidently, ‘only the execution is faulty’ :-).”

“I am not saying that at all. It is a responsible role. Sometimes he raises interest rates to control inflation and sometimes he lowers it to control inflation. Sometimes he raises interest rates to promote employment and sometimes he lowers it to promote employment. Sometimes he raises interest rates to improve the Foreign Exchange reserves and sometimes he lowers it to improve Foreign Exchange reserves.

At any given point of time, half the people are in favour of raising interest rates and the other half, as you might already have calculated, are in favour of reducing them. For achieving the same goals.

Once the action has been taken, either reducing or increasing rates, half the people, irrespective of what they were advocating before the decision was taken, are of the opinion that the situation has improved and the other half, as you might again have calculated, irrespective of what they were advocating before the decision was taken, hold the opinion that the situation has deteriorated.”

The recently appointed ruling-party member of the Rajya Sabha, who, for the sake of brevity we will call SS, was at pains to explain the importance of the role of the Governor of the Reserve Bank of India (RBI). He had been cornered by a section of the media wanting to know the reasons behind the letter he had written to the Prime Minister asking for the removal of the RBI Governor, who, for the sake of brevity again, we will call RR. But, having studies and taught Economics at a leading American University, he was on home ground in this discussion.

SS had begun the discussion on a bellicose note, stating in no uncertain terms, “Unprofessional conduct will not be tolerated. Senior jobs are only for professionals. We owe it to the common man who has voted for professionalism in public affairs. We need a thorough professional for the position of RBI Governor.”

The gathered mediapersons cast accusing glances around the room at the other mediapersons, as if asking “Did you vote for professionalism in public affairs? Coz it wasn’t me.”

Schooled by their profession to be unfazed by political belligerence, they had shot back at SS with, “Can you explain what you mean by professional? Does RR not come with the highest professional qualifications, having studied at the most renowned educational institutions in India, thereafter continuing studies at a leading American University where he has also been teaching”?

“Unfortunately professional has become a loosely used term. I don’t think you people understand the meaning of the word professional,” SS had shot back with equal energy, which quickly transformed into a masterclass of what professional really means, for the gathered mediapersons. “Do you know who is a professional? A professional is one who toes the party-line; of the party in power. A professional is one who is unable to make eye contact with a passing politician, of whatever rank the politician be. A professional is one who speaks in the voice of his employer and can explain away frequent missteps of his employers, politicians in this case, with arcane theories. A professional is who has little independent standing in the world and is forever beholden to the political establishment for his job.

Look at the legendary RBI governors we have had in the past. Thorough professionals. Very few people would have even suspected the existence of the post of RBI Governor, let alone heard their name. And almost nobody knew how their job impacted anyone’s life. Oh, how we wish for such men in today’s times.”

The gathered mediapersons looked at each other. It was as if a weight had been lifted off their chest. They finally knew who a professional was. But they were mediapersons. It was not in their JD to let go. They persisted: “But surely that cannot be reason enough for asking for his removal.”

SS, seeing that the mediapersons were getting it, mellowed down: “You are right. Everyone knows we are fair people. We are fair to everyone who agrees with us. There is another charge against RR. Do you know that he is mentally not fully Indian and has wilfully wrecked the economy.”

Media: “But how did you measure his mental Indianness?”

SS: “I will tell you how. How many times have you heard him say that mythology, wherever it is Hindu, is equal to history?”

Mediapersons looked at each other. They had heard and seen leading politicians and religious leaders do it, but never RR. They shook their heads and said “never”.

SS smiled wryly and continued. “Have you heard him say ‘Bharat Mata ki jai’ without any reason, especially when someone senior in the political hierarchy is watching?”

Mediapersons looked at each other. They had seen and heard leading Bollywood actors and politicians do it, but never RR. The light of realisation was dawning. They shook their heads and said “never”.

SS: “Now do you see why he is not fully Indian?”

Mediapersons were quiet. Sensing his opportunity, SS moved in for the kill: “Moreover, he is also mentally not fully Indian because he has studied and taught Economics at a leading American University. How can you entrust the affairs of the RBI to such a person. We have more mentally fully Indian applicants for the position who have not studied or taught at any leading American University. Some of them have not even studied or taught at any leading, or even lagging, Indian University.

He is not a politician, after all. Only Indian politicians have the ability to study and teach at a leading American University and still be mentally fully Indian. Other than that, the only position open to Non-Resident Indians is a nomination to the Rajya Sabha, especially if they are rich and are likely to invest in unviable businesses by borrowing money from public sector banks.

Besides, he was appointed by the previous government.”

Mediapersons reeled. Logic was difficult to argue against at the best of times. Coming from a maverick leader with a penchant for shooting his mouth off at the slightest provocation, it became an insurmountable task. They struggled to regain some dignity and made a weak query: “But what about the position itself? Do you not think it is an important position for which we should seek out the best person?”

SS’ response is captured in the opening paragraphs of this story. He concluded that analysis with: “As there no clear evidence to say what really happens when interest rates are either reduced or increased, he must be operating against the interest of the country. QED.”

Refreshment trolleys being rolled in saved further embarrassment for the mediapersons. They could avoid looking into the searing eyes of SS with the excuse of picking up a cup of tea.

SS, sensing the need of the moment, climbed down from the dais and mingled with the group. Placing his arm around the shoulders of one, he said, “These are dark days indeed. If RBI governors start opening their mouths and voicing opinions, what will politicians do? Do we want thousands of politicians to lose their jobs just because we have a transparent RBI governor? It will lead to anarchy. Whose utterances will people make fun of? How will we waste the billions we collect as taxes? Senior people need to be careful.”

Picking up a cup of tea and moving onto another scribe, he continued, “Look at toxic debts of public sector banks. Which RBI governor in the past has pushed public sector banks to sever relationships with leading industrial houses by asking for borrowings to be paid back? How will the country finance the next elections if we make recovery claims against industrialists? On whose money will industrialists make merry?”

Moving onto a third scribe, he said, “Have you heard of an RBI governor saying ‘in the land of the blind, one-eyed is king’? Which country’s Central Bank does he think he manage that he has to speak the truth? Norway? Canada? The common man in India is mature. He can handle lies. Again and again. The same ones.”

Meanwhile, at another event, the RBI governor has expressed views. Once again. On the Licence raj and Permit raj. On regulations for small and medium enterprises. On smooth availability of finance. On access to input and output market. On healthy competition. And many other areas that planners and governments need to focus on.